How Much Should a Small Business Spend on Marketing?
“How much should I spend on marketing?” is the question every Metro Detroit owner asks, and every agency answers with a number that happens to match their package. There’s no magic figure. But there is a smart way to set the number, and it starts with what you’re trying to do, not what someone wants to sell you.
The rough benchmark, and why it’s only a start
The common rule of thumb is 5% to 10% of your revenue on marketing to hold steady, and 10% or more if you’re trying to grow. So a shop doing $500,000 a year lands somewhere around $25,000 to $50,000 annually, or roughly $2,000 to $4,000 a month. That’s a starting bracket, not an answer. It tells you the neighborhood. It doesn’t tell you what to buy or whether spending more would even help you right now.
The number depends on three things
What you actually spend should flex on your situation. How fast you want to grow: holding steady costs less than filling a new location’s calendar. Your margins: a business that clears $2,000 profit per job can spend more to win one than a business clearing $80. What a customer is worth: if a new client stays three years and refers two friends, you can spend a lot more to acquire one than the first job alone suggests. Know your numbers and the budget sets itself. Guess at them and any figure is a dart throw.
Where it goes matters more than how much
Here’s the part the percentage rule misses entirely. A well-aimed $1,500 a month beats a sloppy $4,000, every time. I’ve seen owners spend big and get little because the money went to boosted posts and a homepage that couldn’t convert, and I’ve seen small budgets punch way above their weight because the foundation was solid first. Spend on the wrong things and more money just loses faster. (See why boosted posts don’t bring leads.)
Fix the foundation before you scale the spend
This is the order that actually protects your money. Before you increase the budget, make sure the basics work: a fast website that converts, a complete Google Business Profile, a steady flow of reviews. Those are cheap or free and they make every future dollar work harder. Pouring more spend on top of a broken foundation is the single most common way small businesses waste marketing money. Foundation first, then scale. (Here’s why the foundation comes first.)
What I won’t tell you
I won’t hand you a number designed to fit my invoice. If your foundation isn’t ready, the honest answer is to spend a little fixing that before spending a lot on traffic, even though that’s the smaller project. And if your agency can’t connect your spend to your leads, the amount is beside the point, you’re paying for activity, not results. The goal isn’t to spend more or less. It’s to spend on things that compound.
Three example budgets to sanity check against
These are illustrations, not quotes, but they show how the math works. A shop doing $300,000 a year at 7% lands at $21,000 to spend. A $1.2 million contractor at 5% is $60,000. A med spa pushing growth at 10% on $800,000 is $80,000. The percentage matters less than whether the money lands somewhere that can catch the leads.
That’s why I start with the foundation. A one-time website build from $3,500 and a one-time local SEO build from $2,500 are assets you keep, which is a very different spend than $2,000 a month for a report. See the options on Michigan web design and Michigan local SEO.
What I’d cut first
Anything you can’t connect to a call or a form: boosted posts, vague branding, a retainer with no tracking. A $2,500 a month retainer with no tracking is $30,000 a year for a PDF. Cut that first and move it somewhere that can be measured.
Let’s set your real number
I’ll look at your revenue, your margins, and what your marketing is producing now, live, and help you set a budget that fits your business and your goal, not my package. No pitch deck, no closer, just 30 minutes and a straight answer.
Book a free 30-minute strategy call.
See which basic mistakes quietly cost you leads every week: 10 Marketing Mistakes Costing Metro Detroit Businesses
I run AlbaTech as a one-person shop in Metro Detroit. Since 2016 I’ve built and fixed the marketing foundations for around 30 local businesses, and I’m the person owners call after they’ve been burned by an agency that couldn’t say what changed. Work with me and you work with me. No closers, no handoffs.